Japan: Groundhog day?

COMMONLY HELD VIEWS

“I’ve only ever lost clients money in Japan.”

“I don’t need to have anything in Japan. I’d rather own Asia.”

“Why should I buy the Japanese market when Japanese investors don’t?”

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TOPI X (RHS)

FINDING AN OPPORTUNITY

Source: KBC Securities Japan

FINDING AN OPPORTUNITY

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Copyright 2007 Bloomberg LP

INVESTING IN THE LONGER TERM

Source:Macquarie as at 23 February 2009

PBR current

10-Year Mean

Standard Deviation from 10-Year Mean

PSR Current10-Year Mean

Standard Deviation from 10-Year Mean

Toyota Motor 0.9x 1.8x (2.0) 0.5x 0.9x (1.7)

Denso 0.8x 1.5x (2.2) 0.5x 0.9x (1.9)

Canon 1.1x 2.6x (2.9) 0.9x 1.4x (1.8)

Shin-Etsu Chemical 1.2x 2.4x (2.0) 1.3x 2.2x (2.1)

Nippon Electric 1.6x 2.1x (1.1) 2.4x 2.4x 0.0

Shionogi 0.9x 2.0x (1.2) 1.0x 1.4x (0.5)

SO WHY BOTHER WITH JAPAN?

Global-leading, well-managed companies

Strength of the “Japanese business model” drives home competitive advantage

Key beneficiaries of long-term Asian growth

Country of domicile is an advantage – “Japan discount” weighs heavy on valuations

Listed corporate earnings are very different from Japanese GDP

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CASE STUDYToyota

QUALITY - Balance sheet strength driving market share gains

VALUE - Trading at significant discounts to long-term valuations

GROWTH - Continued investment has created the platform for sustainable future growth

CHANGE - Inventory adjustment nearing completion. Cost reduction is important theme

Past performance is not a guide to future returns. Source: Thomson Datastream. As at 19 February 2009. This information does not constitute investment advice, nor is it an offer or invitation to subscribe for shares in the stock.

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CASE STUDYDenso

QUALITY - Balance sheet strength offers defensiveappeal in the face of net losses

VALUE - Trading at a large discount to book value

GROWTH - Rising value of sales per vehicle andbusiness won from overseas car-makers

CHANGE - Aggressive cost reduction measures

Past performance is not a guide to future returns. Source: Thomson Datastream. As at 19 February 2009. This information does not constitute investment advice, nor is it an offer or invitation to subscribe for shares in the stock.

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CASE STUDYCanon

QUALITY - Leading market shares in copiers, laserbeam printers (LBP), digital still cameras. Large net cash position

VALUE - Cyclical downturn has pushed down valuations

GROWTH - Growing sales of LBPs in emerging markets

CHANGE - Analyst revision stabilising would be the firstsign of recovery. Weak yen benefits. Scope to cut costs

Past performance is not a guide to future returns. Source: Thomson Datastream. As at 19 February 2009. This information does not constitute investment advice, nor is it an offer or invitation to subscribe for shares in the stock.

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CASE STUDYShin-Etsu Chemical

QUALITY - Global leader in silicon wafers and PVC. Excellent long-term record in value creation, consistent growth

VALUE - Cheap against long-term history. PER 11x

GROWTH - Strong record in new product innovation

CHANGE - Aggressive attitude in cutting depreciation

Past performance is not a guide to future returns. Source: Thomson Datastream. As at 19 February 2009. This information does not constitute investment advice, nor is it an offer or invitation to subscribe for shares in the stock.

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CASE STUDYNippon Electric Glass

QUALITY - Historic margins and cash generation high

VALUE - Hit hard by production adjustment at customers. Valuations sent to large discount to book, despite balance sheet strength

GROWTH - Expect volume growth to continue. Pricing power still good

CHANGE - Share price will respond aggressively to improving levels of capacity utilisation

Past performance is not a guide to future returns. Source: Thomson Datastream. As at 19 February 2009. This information does not constitute investment advice, nor is it an offer or invitation to subscribe for shares in the stock.

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CASE STUDYShionogi

QUALITY - The “right size” – big enough to spend on R&D, small enough to enjoy the benefits

VALUE - Attractive PER valuation (13x 3/10). Scope to expandshareholder returns given strong cash-flows

GROWTH - Anti-cholesterol treatment Crestor is the main top-line driver

CHANGE - Stock sold-off on shift out of defensives. This created a good buying opportunity

Past performance is not a guide to future returns. Source: Thomson Datastream. As at 19 February 2009. This information does not constitute investment advice, nor is it an offer or invitation to subscribe for shares in the stock.

WHAT YOU NEED FROM A JAPANESE EQUITIES MANAGER

Long-term focus

Identifying companies with sustainable business models and the ability to generate value for shareholders

Timing

Understanding the profit cycle

Buy and sell decisions

And one who will tell you when to take money off the table

MARTIN CURRIE’S JAPAN CREDENTIALS

50% of our £9.9 billion of assets are invested in Asia

Stable and deeply resourced team

Differing perspectives, complementary skill-sets

Strength and continuity of relationships

19 year record in Japan – outperformance of 3.7% p.a. vs. Topix over this period*

Clear investment philosophy and disciplined process

Past performance is not a guide to future returns. Source: Lipper Hindsight. Fund: Martin Currie Japan Fund. Bid-bid basis with gross income reinvested. *From 14 September 1989 to 31 January 2009. **3 years to 31 December 2008

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Investment experience 81 years

Experience of investing in Japan

69 years

Martin Currie Investment Management Limited (MCIM) has issued and approved this presentation in its capacity as investment adviser. MCIM is referred to throughout as ‘Martin Currie’. MCIM is authorised and regulated by the Financial Services Authority and is a member of the Investment Management Association. Registered in Scotland (no 66107), registered address Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2ES.  The presentation may not be distributed to third parties and is intended only for the attendee. The presentation does not form the basis of, nor should it be relied upon in connection with, any subsequent contract or agreement. It does not constitute, and may not be used for the purpose of, an offer or invitation to subscribe for or otherwise acquire shares in any of the products mentioned. The information contained in this presenter has been compiled with considerable care to ensure its accuracy. But no representation or warranty, express or implied, is made to its accuracy or completeness. Martin Currie has procured any research or analysis contained in this presentation for its own use. It is provided to you only incidentally, and any opinions expressed are subject to change without notice. Martin Currie Investment Funds (MCIF) Martin Currie Japan Fund (the fund) is a subfund of an Open-ended investment company (Oeic). The fund is referred to throughout as the Japan OEIC Fund. Martin Currie Unit Trusts Limited is the Authorised Corporate Director for the Oeic, and is an affiliate of MCIM. It is also authorised and regulated by the Financial Services Authority. MCIM is the investment adviser to the fund. In the exceptional event that an Oeic subfund’s liabilities exceed its net assets, the Oeic structure allows for these liabilities to be allocated across other subfunds in the Oeic. Investment in the fund can only be made in accordance with the terms and conditions outlined in the Simplified Prospectus or Key features document available at the time of investing.

Performance information - with the exception of any figures calculated on a fund's net asset value, which fall outside the scope of the GIPS standards, all performance information calculated by Martin Currie complies with the GIPS standards.

Past performance is not a guide to future returns. Markets and currency movements may cause the value of investments and income from them to fall as well as rise and you may get back less than you invested when you decide to sell your investments. There can be no assurance that you will receive comparable performance returns, or that investments will reflect the performance of the stock examples, contained in this presenter. Movements in foreign exchange rates may have a separate effect, unfavourable as well as favourable, on the gain or loss otherwise experienced on an investment.  Funds which invest in one country carry a higher degree of risk than those with portfolios diversified across a number of markets. Investment in the securities of smaller and unquoted companies can involve greater risk than is customarily associated with investment in larger, more established, companies. In particular, smaller companies often have limited product lines, markets or financial resources and their management may be dependent on a smaller number of key individuals. In addition, the market for stock in smaller companies is often less liquid than that for stock in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such stock. Proper information for determining their value, or the risks to which they are exposed, may not be available. Investment in derivative instruments, including futures, options or contracts for differences, carries a high risk of loss, the markets in these investments being very volatile. A relatively small adverse market movement may result not only in the loss of the original investment but also in unquantifiable further loss exceeding any margin deposited. Warrants often involve a high degree of gearing so that a relatively small movement in the price of the security to which the warrant relates may result in a disproportionately large movement, unfavourable as well as favourable, in the price of the warrant.

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